Q1 Update: Average Joe Broad Market Portfolios

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Includes: DIA, QQQ, SPY
by: Scott Nickerson

Summary

0.9% Average gain across all yearly portfolios.

2nd Highest start in 16 years for a new yearly portfolio.

2 portfolios projected to exceed $500.00 in dividends this year.

At the end of Q1, as the broad market indices struggled to attain the levels held at the end of Q2 last year, the Average Joe Broad Market portfolios continued their slow but steady pace of gains, ending the quarter with an average 0.9% gain across the 16 yearly start funds with a full year under their belt (2000-2015).

For those new readers, the premise of the Average Joe Broad Market portfolios is twofold. The first, is to provide a real world "check and balance" to the industry wide proclivity to provide a comparison to a particular product to a $10,000.00 investment in the S&P 500 or the Dow Jones Industrial Average. The second is to provide a basis for a buy and hold investment in the broad market that even a novice "Average Joe" can follow and maintain with little oversight or management.

The portfolios invest in the three major broad market ETFs: State Street Global Advisors SPDR S&P500 ETF (NYSEARCA:SPY), Invesco's Powershares QQQ (NASDAQ:QQQ) and another SSGA SPDR fund, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) The original article, explaining the methodologies used, is (here). The update for Q4 is (located here).

A quick reminder: Due to ease of use utilizing Yahoo data, these portfolios are on a fiscal, not a calendar quarter. They begin with the first Monday of every quarter and end on the last day of the week of the last Monday of the quarter which may actually fall into the following calendar quarter.

The ETFs for Fiscal Q1

For Q1, theState Street Global Advisors SPDR S&P500 ETF increased, moving from a close of $203.87 at the end of Q4 to close out Q1 at $206.92. A gain of $3.05, or 1.49%. At that rate, it's only a couple of quarters away from retaking its all-time high. This was the seventh consecutive Q1 gain for this ETF.

Invesco's Powershares QQQ did not fare as well, falling slightly from Q4's close of $111.41 to Q1's close of $110.36. A loss of $1.05 or -0.94%. Of the 17 first quarters these portfolios have seen, this is only the sixth time QQQ has been negative in the first quarter.

And, lastly, State Street Global Advisors SPDR Dow Jones Industrial Average ETF climbed from a Q4 close of $173.99 to Q1's close of $177.72, posting a gain of $3.73 or 2.14%. This close put the ETF just $0.22 short of its all-time high quarterly close back in Q4 of 2014.

2016 Portfolio start

At the beginning of every year, a new portfolio is started using the same criteria as previous years. An initial investment of $500.00 kicks off the portfolio and then reinvestment begins following the methodologies outlined in the original article. Below is a chart showing the value of each of the yearly portfolios at the end of their first quarter. The 2016 portfolio posted the second highest value amongst the 17 annual portfolios.

Year

Value after one Qtr

2016

$578.15

2015

$544.44

2014

$540.60

2013

$554.19

2012

$580.83

2011

$554.67

2010

$552.11

2009

$510.45

2008

$526.62

2007

$534.41

2006

$542.39

2005

$523.44

2004

$534.61

2003

$513.68

2002

$510.49

2001

$455.49

2000

$576.77

Click to enlarge

Portfolio changes and current positions for End of Q1

For the portfolios with a year's worth of results under their belt, five of the sixteen portfolios added to their positions in the first quarter. The 2001 and 2002 portfolios each added 8 additional shares of SPY. The 2003 (8 shares), 2011 (2 shares) and 2015 (1 shares) portfolios added shares of QQQ. The current positions in the three ETFs for each portfolio is shown in the chart below.

Year

SPY shares

QQQ shares

DIA shares

2016

1

1

1

2015

2

2

1

2014

2

2

2

2013

4

4

2

2012

5

5

3

2011

7

7

5

2010

7

7

7

2009

11

11

11

2008

15

11

11

2007

15

15

15

2006

19

19

19

2005

23

23

23

2004

31

31

23

2003

39

39

31

2002

46

38

38

2001

54

46

46

2000

54

55

54

Click to enlarge

Q1 Gains

The net capital gains (Gross gain less investment for the quarter and dividends received) for the quarter are shown in the chart below.

Year

Net Gain/Loss

% Gain/Loss

2015

($ 13.72)

-1.8%

2014

($ 1.72)

-0.2%

2013

$ 15.06

0.9%

2012

$ 20.68

0.9%

2011

$ 39.95

1.3%

2010

$ 39.41

1.0%

2009

$ 61.94

1.1%

2008

$ 74.13

1.2%

2007

$ 84.46

1.1%

2006

$107.27

1.2%

2005

$129.49

1.1%

2004

$144.69

1.0%

2003

$268.09

1.5%

2002

$369.26

1.9%

2001

$414.30

1.8%

2000

$302.87

1.1%

Click to enlarge

Dividends

Dividends were typical of Q1 dividends, falling behind Q4's year end dividends but still significantly higher than Q1 of last year. The trimmed average gain year over year is 23.8%. Q1 dividends have averaged 20.8% of the total dividends for the year. The projected dividend column in the Dividend Chart below is a 2016 projection based on this average.

Year

Dividends Q1 2015

Dividends Q4 2015

Dividends Q1 2016

Total Dividends Received

Projected 2016 Dividends

2016

N/A

N/A

$ 2.32

$ 2.32

$ 11.15

2015

$ 0.64

$ 2.62

$ 3.53

$ 11.26

$ 16.97

2014

$ 3.29

$ 5.23

$ 4.64

$ 28.72

$ 22.31

2013

$ 4.31

$ 7.99

$ 7.06

$ 58.35

$ 33.94

2012

$ 8.74

$ 11.12

$ 9.38

$ 100.20

$ 45.10

2011

$ 10.78

$ 15.15

$ 14.01

$ 150.72

$ 67.36

2010

$ 15.10

$ 18.32

$ 16.22

$ 222.44

$ 77.98

2009

$ 19.64

$ 27.15

$ 25.49

$ 330.21

$122.55

2008

$ 23.72

$ 28.79

$ 30.34

$ 393.24

$145.87

2007

$ 28.26

$ 39.25

$ 34.76

$ 507.57

$167.12

2006

$ 36.89

$ 45.80

$ 44.03

$ 656.54

$211.68

2005

$ 40.98

$ 58.88

$ 53.30

$ 843.56

$256.25

2004

$ 49.61

$ 71.20

$ 63.00

$1,062.42

$302.88

2003

$ 66.86

$ 89.39

$ 81.54

$1,393.67

$392.02

2002

$ 73.78

$ 99.44

$ 88.07

$1,582.17

$423.41

2001

$ 91.04

$120.38

$106.61

$1,934.84

$512.55

2000

$108.29

$141.92

$125.15

$2,282.09

$601.68

Click to enlarge

Growth Rates

Based on the current positions of the portfolios, the growth rates average 8.22%. The outliers to this in the chart below (2016, 2015, 2014 and 2009) are either a portfolio that has not matured, or, as is the case for 2009, took advantage of the market dip in late 2008 in its initial purchases. I expect all of these outliers will come in line over time.

Year

Growth Rate

2016

13.81%

2015

-1.29%

2014

3.37%

2013

7.40%

2012

8.94%

2011

9.33%

2010

9.59%

2009

11.08%

2008

9.20%

2007

8.69%

2006

8.53%

2005

8.70%

2004

8.55%

2003

9.28%

2002

8.36%

2001

8.36%

2000

7.91%

Click to enlarge

Investment

The methodology used in the Average Joe Broad Market Portfolios is to slowly increase weekly contributions to limit the "shock" of incremental investment. The chart below shows the investment for each yearly start portfolio for the past quarter, the total investment made to date and the planned total investment still to be made if the portfolio is continued for the full 35 year plan.

Year

Q1 Investment

Investment to Date

Add'l Planned Investment (35yr)

2016

$ 65.00

$ 561.00

$139,559.00

2015

$ 78.00

$ 833.00

$139,286.00

2014

$ 91.00

$ 1,158.00

$138,961.00

2013

$ 104.00

$ 1,535.00

$138,584.00

2012

$ 117.00

$ 1,969.00

$138,155.00

2011

$ 143.00

$ 2,464.00

$137,657.00

2010

$ 169.00

$ 3,063.00

$137,059.00

2009

$ 195.00

$ 3,766.00

$136,357.00

2008

$ 221.00

$ 4,573.00

$135,551.00

2007

$ 247.00

$ 5,490.00

$134,641.00

2006

$ 299.00

$ 6,533.00

$133,901.00

2005

$ 351.00

$ 7,784.00

$132,353.00

2004

$ 403.00

$ 9,243.00

$130,897.00

2003

$ 455.00

$10,910.00

$129,233.00

2002

$ 507.00

$12,788.00

$127,361.00

2001

$ 585.00

$15,400.00

$125,255.00

2000

$ 663.00

$17,859.00

$122,837.00

Click to enlarge

Current Values

The current values of each of the portfolios is shown in the chart below along with year ago and last quarter ending values for reference.

Year

Current (Q1 2016) Close

Q4 2015 Close

Q1 2015 Close

2016

$ 578.15

N/A

N/A

2015

$ 827.54

$ 759.73

$ 544.44

2014

$ 1,225.29

$ 1,118.40

$ 874.04

2013

$ 1,794.63

$ 1,668.51

$ 1,392.58

2012

$ 2,473.32

$ 2,326.26

$ 1,988.33

2011

$ 3,256.30

$ 3,059.34

$ 2,662.95

2010

$ 4,236.51

$ 4,011.88

$ 3,529.91

2009

$ 5,729.51

$ 5,447.08

$ 4,877.97

2008

$ 6,658.71

$ 6,333.24

$ 5,666.67

2007

$ 8,043.88

$ 7,677.66

$ 6,875.47

2006

$ 9,770.86

$ 9,320.86

$ 8,467.60

2005

$ 12,047.43

$ 11,513.64

$ 10,488.54

2004

$ 14,521.45

$ 13,910.76

$ 12,781.17

2003

$ 18,371.91

$ 17,567.28

$ 16,072.49

2002

$20,775.95

$ 19,811.72

$ 18,191.90

2001

$24,777.73

$23,671.82

$21,845.88

2000

$28,491.50

$27,400.48

$25,142.28

Click to enlarge

Projections

Based on the continued investment shown in the chart earlier in this article, the chart below shows the current projections for each portfolio at the 20, 25 30 and 35 year mark.

Year

Years

20 year projection

25 year projection

30 year projection

35 year projection

2016

0.25

$ 84,802.08

$ 199,604.40

$ 443,243.70

$ 946,241.45

2015

1.25

$ 26,916.81

$ 48,709.10

$ 80,735.86

$ 124,874.40

2014

2.25

$ 36,377.89

$ 69,170.13

$ 120,927.24

$ 197,946.02

2013

3.25

$ 49,664.31

$ 100,576.62

$ 188,509.32

$ 333,102.12

2012

4.25

$ 56,738.35

$ 118,440.96

$ 229,650.20

$ 421,404.50

2011

5.25

$ 58,731.94

$ 123,607.69

$ 241,873.12

$ 448,388.51

2010

6.25

$ 60,169.75

$ 127,368.83

$ 250,857.57

$ 468,426.92

2009

7.25

$ 69,184.74

$ 151,589.12

$ 310,362.30

$ 605,159.41

2008

8.25

$ 58,074.64

$ 121,897.96

$ 237,812.98

$ 439,389.17

2007

9.25

$ 55,476.05

$ 115,198.95

$ 222,052.69

$ 404,798.04

2006

10.25

$ 54,713.61

$ 113,251.97

$ 217,517.26

$ 394,947.09

2005

11.25

$ 55,543.10

$ 115,370.59

$ 222,453.49

$ 405,670.84

2004

12.25

$ 54,815.05

$ 113,510.52

$ 218,118.37

$ 396,249.97

2003

13.25

$ 58,492.49

$ 122,984.14

$ 240,390.62

$ 445,098.43

2002

14.25

$ 53,892.05

$ 111,163.57

$ 212,675.50

$ 384,483.33

2001

15.25

$ 53,927.44

$ 111,253.33

$ 212,883.10

$ 384,930.87

2000

16.25

$ 51,871.34

$ 106,069.62

$ 200,967.70

$ 359,411.13

Click to enlarge

Summary

In a year where the market averages sustained and recovered from two 10% dips, the Average Joe Broad Market portfolios continue to inch forward with gains and provide an easy way for the average Joe to attain and keep the money invested in the portfolios. For seasoned market professionals this may seem too rudimentary and not a very good return. But for hundreds or thousands of novice investors, this is truly a great way to start out.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.